Ex-UBS Trader Accused by U.S. of Manipulating Metals Prices

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This content was published on September 13, 2017 8:19 PMSep 13, 2017 - 20:19

(Bloomberg) -- A former trader at UBS Group AG was charged with conspiracy and fraud over his suspected role in manipulating the price of precious metals.

Andre Flotron, who worked at the bank in Switzerland, is the second person publicly charged in the U.S. investigation into the fixing of gold, silver, platinum and palladium prices. Flotron, a Swiss resident, was arrested while visiting the U.S., according to people familiar with the matter. He was charged with conspiracy, wire fraud, commodities fraud and spoofing, according to a prepared complaint.

Flotron’s arrest extends the Justice Department’s examination of whether bank traders conspired to rig interest-rate benchmarks and manipulate currency exchanges. The probes, which led to guilty pleas and billions of dollars in payouts by some of the world’s biggest banks, also led prosecutors to begin investigating whether metals traders were placing orders without the intent of executing them in an attempt to move prices in their favor, a tactic known as spoofing.

Swiss regulators have also shown an interest in Flotron, telling him in a 2014 letter of a possible enforcement action, two people told Bloomberg News at the time. It’s unclear whether Switzerland’s Financial Market Supervisory Authority disciplined him.

UBS won immunity from criminal fraud charges in the Justice Department metals investigation as part of its 2015 settlement ending interest rate and currency rigging probes.

Prosecutors have pursued charges for spoofing more aggressively since the adoption of the Dodd-Frank financial law, which made the practice illegal. Most notably, they charged a British trader with contributing to the “flash crash” of 2010.

In June, David Liew, a former Deutsche Bank AG trader, pleaded guilty to fraud in federal court in Chicago for his role in the spoofing of contracts for gold, silver, platinum and palladium, according to court papers. Along with spoofing, he also acknowledged front-running customers’ orders.

To contact the reporters on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net, David Voreacos in federal court in Newark, New Jersey, at dvoreacos@bloomberg.net.

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, David S. Joachim